ExxonMobil’s Chief Financial Officer, Phil Rietema and the company’s Guyana President Alistair Routledge.
ExxonMobil and its co-venturers could lose at least US$350 million monthly in revenues if the Court of Appeal does not later this month suspend High Court orders that require the Environmental Protection Agency (EPA) to enforce insurance and unlimited financial guarantees and the companies fails to secure them, senior ExxonMobil officials said Friday.
“If we can’t meet the requirements of the order, then the Liza phase 1 permit would be suspended so it would only apply to Liza phase 1 so it wouldn’t affect the operations of the rest of the Stabroek Block at this time,” President of ExxonMobil Guyana Alistair Routledge.
The parties in the case have to return before Appellate Judge, Rishi Persaud on May 29, 2023.
Chief Financial Officer, Phil Rietema estimated that figure of “lost revenue” if the Appeal Court here does not suspend the orders granted by High Court Judge Sandil Kissoon on May 31, 2023 pending the hearing of an appeal.
Mr Routledge calculated that at 155,000 barrels per day at an price of US$78 dollars per barrel, the cost could of the suspension of the Liza 1 permit could be quite a expensive when the costs associated with going into a shutdown for an extended period of time are included “while the appeal progresses or until such time or if it were possible to secure the necessary assurances.”
He said the investors and Guyana’s economy would also suffer from the suspension of the permit. “We filed an application for that order to be stayed because we believe if we are unable to secure, as ordered, those unlimited guarantees, then obviously the permit is suspended as per that order and then we would have to stop production on the Liza Phase 1 facility which then has significant financial implications for all of the investors but also for obviously the country in the sense of revenues that would be lost,” he said.
Routledge could not say definitively whether co-venturers, American-owned Hess Corporation or China’s state-owned China National Overseas Oil Corporation (CNOOC) would be able to provide unlimited parent company or affiliate company guarantees. “If we have to, what we are working on is seeing whether we can secure such a guarantee from our affiliated companies or parent companies and Hess and CNOOC are also asking those questions…We don’t know whether we’ll be able to secure those. That is the question but that is something we are pursuing in case that order is maintained,” he said.
Civil society activists Frederick Collins and Godfrey Whyte won their case against Guyana’s Environmental Protection Agency (EPA) that it must ensure that ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited, provide “unlimited and uncapped liability for all costs associated with clean up, restoration and compensation for all damages caused by any discharge of any contaminant arising from its exploration, development and petroleum production activities within the Stabroek Block, Offshore Guyana.”
He reiterated that in the unlikely event there is an oil spill, the company has subscribed to a capping stack to reach and seal a blown-out well in just over five days and the company has already obtained US$600 million in insurance, local affiliates have US$18 billion to US$19 billion of financial assets in Guyana and US$2 billion in financial guarantees by affiliates of the local companies to finance the cost of an estimated clean up.
The court found that the EPA breached its legal responsibility by failing to ensure that EEPGL provides environmental liability insurance and to have an independent insurance consultant retained by the Agency to review and examine the insurance package to ensure it is in keeping with the environmental permit. ExxonMobil’s local subsidiary, according to the court, failed to comply with its financial assurance obligation to provide environmental liability insurance of such type and in such amount as is customary in the international petroleum industry from an insurance company of standing and repute.